NLRB – Page 2 – Workforce

February 13, 2019June 29, 2023

How We Work Might Be Changing But Independent Contractor Risks Remain the Same

The way we work in America is changing. The relationships between companies and their workers are more fluid and varied than in decades past. Our task in this appeal is to apply traditional legal protections to one such relationship.

So starts the 6th Circuit’s opinion in Acosta v. Off Duty Police Servs., which applies the traditional “economic realities” test to determine whether private security and traffic control officers are employees or independent contractors.

One would think that with such a pronouncement at the head of the 6th Circuit’s opinion, the court would be making a startling pronouncement broadening the landscape of who qualifies as an independent contractor.

Those making that assumption, however, are sorely mistaken.

The “economic realities” test balances six factors:

The permanency of the relationship between the parties
The degree of skill required for the rendering of the services
The worker’s investment in equipment or materials for the task
The worker’s opportunity for profit or loss, depending upon his skill
The degree of the alleged employer’s right to control the manner in which the work is performed
Whether the service rendered is an integral part of the alleged employer’s business

In balancing the factors, the court determined that all of ODPS’s private officers were employees, and none qualified as independent contractors.

1. Permanency of the Relationship

This factor examines the length and regularity of the working relationship between the parties. While some ODPS workers accepts jobs intermittently and for short terms, many worked for ODPS long-term, and some for decades without interruption. In addition to length, many ODPS workers did so with regularity (e.g., 20 – 25 hours per week, or even up to 50 hours per week). These facts mitigated against the fact that many ODPS was not many workers’ primary job or their primary source of income. Yet, according to the court, multiple sources of income is not dispositive, and using such a fact to deny employment status would ignore the “economic reality” that many workers need two (or more) sources of income just to make ends meet. Thus, the court concluded that this factor weighed in favor of employment status.

2. Degree of Skill

The evidence showed that the workers required little skill to render services. Workers only need four hours of training, and many have no background in law enforcement whatsoever. The workers described the jobs as either sitting in their cars with their lights flashing, or patrolling a parking lot spotting potential problems. Thus, this factor weighed heavily in favor of employee status.

3. Investment in Equipment and Materials

This factor compares the worker’s total investment to the company’s total investment. While the officers needed to buy their own equipment and provide their own vehicles, each only invested between $3,000 and $5,000 of their own money, compared to the hundreds of thousands of dollars ODPS spent to operate the business. Thus, this factor weighed in favor of employee status.

4. Opportunity for Profit and Loss

Courts evaluate this factor by asking if workers “could exercise or hone their managerial skill to increase their pay.” ODPS argued that workers could do so, because they had the discretion to reject assignment, thereby limiting their ability to increase their pay. The court, however, was not persuaded. That discretion, according to the court, is not managerial skill. Moreover, because the workers worked a set shift when they accepted work, they had no control over how much they earned based on how long they worked. They could not earn more by completing the job more quickly and moving on another assignment. Their skill did not increase their ability to complete their jobs and accept more, it merely gave them discretion to say yes or no to jobs when offered. Thus, this factor weighed in favor of employee status.

5. Alleged Employer’s Degree of Control

This factor asks whether the company “retains the right to dictate the manner” of the worker’s performance.” ODPS maintained policies and procedures, which addressed: (1) the type and color of uniform that may be worn, (2) vehicle and light requirements, (3) rules for exchanging job assignments with other ODPS workers, and (4) general rules on workplace presentation and conduct. ODPS also represented to its customers that it would inspect the work sites and supervise its workers.Workers testified that ODPS disciplined them for violating work rules, such as declining jobs. ODPS set the rate at which the workers were paid, would tell the workers where to go for the job, when to arrive, and whom they should contact when they got there, and had supervisors to whom they reported. Workers were also required to sign non-compete agreements, and ODPS had sued former workers to prevent them from working for competitors. Thus, for the majority of ODPS’s workers, this factor weighed in favor of employee status.

6. Integral Part of the Alleged Employer’s Business

ODPS built its business around the security and traffic control services provided by its workers. It could not function or service its customers without them. Therefore, this factor weighed heavily in favor of employee status.

Balancing the evidence, the 6th Circuit had little difficulty concluding that ODPS’s workers were its employees, and not independent contractors: “Taking all these factors into consideration with an eye on the ultimate question of economic dependence, ODPS’s workers … were employees entitled to overtime wages under the FLSA.”

Off Duty Police Servs. serves as a stark reminder for employers that in all but the clearest of cases, businesses take a huge wage-and-hour risk by classifying workers as anything other than employees. The way we work might be changing, but the risk you take by misclassifying employees as independent contractors is staying exactly the same.

Also read: Identifying Independent Contractors Vs. Employees

November 17, 2016June 29, 2023

Judge Takes NLRB to Task for Rules Protecting Racist, Sexist Workplace Misconduct

Of all of the decisions the NLRB has handed down in the past eight years,

Consolidated Communications v. NLRB (D.C. Cir. 9/13/16) is one such case.

More compelling than the decision, however, is the concurring opinion written by Judge Patricia Millett, in which she calls on the NLRB to carry out its mission to protect the rights of all employees, not just those who happen to be walking a picket line. How can a picket line magically convert misconduct that is “illegal in every other corner of the workplace” into the “unpleasantries that are just part and parcel of the contentious environment and heated language that ordinarily accompany strike activity,” she asks?

Her opinion is so well written, I’ve excerpted almost all of it below for your reading and consideration.

I write separately, though, to convey my substantial concern with the too-often cavalier and enabling approach that the Board’s decisions have taken toward the sexually and racially demeaning misconduct of some employees during strikes. Those decisions have repeatedly given refuge to conduct that is not only intolerable by any standard of decency, but also illegal in every other corner of the workplace. The sexually and racially disparaging conduct that Board decisions have winked away encapsulates the very types of demeaning and degrading messages that for too much of our history have trapped women and minorities in a second-class workplace status.

While the law properly understands that rough words and strong feelings can arise in the tense and acrimonious world of workplace strikes, targeting others for sexual or racial degradation is categorically different. Conduct that is designed to humiliate and intimidate another individual because of and in terms of that person’s gender or race should be unacceptable in the work environment … .

Nothing in the Board’s decisions has offered any plausible justification, and I can conceive of none, for concluding that the rights of workers — all workers — are protected by turning picket lines into free zones for sexually or racially abusive and demeaning conduct. Instead, the Board’s rulings dismiss such abhorrent behavior as “unpleasantries” that are just part and parcel of the contentious environment and heated language that ordinarily accompany strike activity … .

There is no question that Emily Post rules do not apply to a strike … .

So giving strikers a pass on zealous expressions of frustration and discontent makes sense. Heated words and insults? Understandable. Rowdy and raucous behavior? Sure, within lawful bounds. But conduct of a sexually or racially demeaning and degrading nature is categorically different. Calling a female co-worker a “whore” or exposing one’s genitals to her is not even remotely a “normal outgrowth” of strike-related emotions. In what possible way does propositioning her for sex advance any legitimate strike-related message? And how on earth can calling an African-American worker “nigger” be a tolerated mode of communicating worker grievances?

Such language and behavior have nothing to do with attempted persuasion about the striker’s cause. Nor do they convey any message about workplace injustices suffered, wrongs inflicted, employer mistreatment, managerial indifference, the causes of employee frustration and anger, or anything at all of relevance about working conditions or worker complaints. Indeed, such behavior is flatly forbidden in every other corner of the workplace because it is dangerously wrong and breathes new life into economically suffocating and dehumanizing discrimination that we have labored for generations to eliminate. Brushing that same behavior off when it occurs during a strike simply legitimates the entirely illegitimate, and it signals that, when push comes to shove, discriminatory and degrading stereotypes can still be a legitimate weapon in economic disputes.

And by the way, the Board is supposed to protect the rights of all employees covered by the Act … . Holding that such toxic behavior is a routine part of strikes signals to women and minorities both in the union and out that they are still not truly equals in the workplace or union hall. For when the most important labor/management battles arise and when the economic livelihood of the employer and the employees is on the line, the Board’s decisions say that racial and misogynistic epithets, degrading behavior, and race- and gender-based vilification are once again fair game … .

Nor do the Board’s decisions grapple with the enduring effects in the workplace of such noxious language and behavior. The assumption that such gender- and race-based attacks can be contained to the picket line blinks reality. It will often be quite hard for a woman or minority who has been on the receiving end of a spew of gender or racial epithets — who has seen the darkest thoughts of a co-worker revealed in a deliberately humiliating tirade — to feel truly equal or safe working alongside that employee again. Racism and sexism in the workplace is a poison, the effects of which can continue long after the specific action ends … .

Accordingly, if the Board’s decisions insist on letting the camel’s nose of racial and gender discrimination into the work environment, the Board should also think long and hard about measuring the “threats” associated with such sexually or racially degrading behavior from the perspective of a reasonable person in the target’s position, and how nigh impossible it is to cabin racism’s and sexism’s pernicious effects … .

To be sure, employees’ exercise of their statutory rights to oppose employer practices must be vigorously protected, and ample room must be left for powerful and passionate expressions of views in the heated context of a strike. But Board decisions’ repeated forbearance of sexually and racially degrading conduct in service of that admirable goal goes too far. After all, the Board is a component of the same United States government that has fought for decades to root discrimination out of the workplace. Subjecting co-workers and others to abusive treatment that is targeted to their gender, race, or ethnicity is not and should not be a natural byproduct of contentious labor disputes, and it certainly should not be accepted by an arm of the federal government. It is 2016, and “boys will be boys” should be just as forbidden on the picket line as it is on the assembly line.

Bravo. I couldn’t have said it better myself.

Jon Hyman is a partner at Meyers, Roman, Friedberg & Lewis in Cleveland. Comment below or email editors@workforce.com. Follow Hyman’s blog at Workforce.com/PracticalEmployer.

October 6, 2016June 29, 2023

NLRB Takes One on the Chin in Appellate Decision

I am no fan of the NLRB and its aggressive agenda over the past few years. And, it appears I don’t stand alone.

Check out these scathing words from the D.C. Circuit Court of Appeals in Heartland Plymouth Court MI v. NLRB[pdf], in which the appellate court ordered the NLRB to pay the employer’s $17,649 in legal fees for the board’s bad faith litigation by continuing to pursue a case that the NLRB knew it could not win. Why? Because the NLRB’s position ran counter to the law of every single appellate court.

Facts may be stubborn things, but the Board’s longstanding “nonacquiescence” towards the law of any circuit diverging from the Board’s preferred national labor policy takes obduracy to a new level. As this case shows, what the Board proffers as a sophisticated tool towards national uniformity can just as easily be an instrument of oppression, allowing the government to tell its citizens: “We don’t care what the law says, if you want to beat us, you will have to fight us.” …

We recognize the Board’s unimpeded access to the public fisc means these modest fees can be dismissed as chump change. But money does not explain the Board’s bad faith; “the pleasure of being above the rest” does. Let the word go forth: for however much the judiciary has emboldened the administrative state, we “say what the law is.” In other words, administrative hubris does not get the last word under our Constitution. And citizens can count on it.

Bravo, D.C. Circuit, bravo.

September 29, 2016June 29, 2023

Will OSHA’s New Whistleblower Rules Invalidate Your Settlement Agreement?

When an employer presents an agreement to an employee ancillary to the separation of that employee’s employment, or settles a claim asserted by an employee, part of the bargain for which the employer is paying is finality. Yet, over the past couple of years, the federal government has made this finality harder and harder to achieve.

Confidentiality, non-disparagement, and other “gag” provisions in employee separation and settlement agreements have been under attack by various federal agencies, including the EEOC and the NLRB. Now, OSHA also has joined the fray.

Last month, OSHA published new guidance, part of its revisions to its Whistleblower Investigations Manual, which seeks to free employees to report safety and other violations to the government.

As part of OSHA’s administration of myriad whistleblower protection statutes, OSHA reviews settlement agreements between complainants and their employers. OSHA only approves such agreements that it deems to be fair, adequate, reasonable, and in the public interest, and if the employee’s consent was knowing and voluntary. If OSHA encounters a provision that prohibits, restricts, or otherwise discourages an employee from participating in protected activity, it will reject the agreement until the employer removed the allegedly offensive provision.

OSHA’s updated guidance clarifies the criteria OSHA will use to evaluate whether an agreement impermissibly restricts or discourages protected activity.

Moving forward, OSHA will not approve any of the following “gag” provisions:

A provision that restricts the employee’s ability to provide information to the government, participate in investigations, file a complaint, or testify in proceedings based on an employer’s past or future conduct. For example, OSHA will not approve a provision that restricts an employee’s right to provide information to the government related to an occupational injury or exposure.

A provision that requires an employee to notify his or her employer before filing a complaint or voluntarily communicating with the government regarding the employer’s past or future conduct.

A provision that requires an employee to affirm that he or she has not previously provided information to the government or engaged in other protected activity, or to disclaim any knowledge that the employer has violated the law.

A provision that requires an employee to waive his or her right to receive a monetary award from a government-administered whistleblower award program for providing information to a government agency, or that requires an employee to remit any portion of such an award to the employer.

So, what is an employer to do? How can an employer secure as much finality as possible while satisfying OSHA’s stance against gag provisions? OSHA suggests prominently inserting the following clause into the agreement:

Nothing in this Agreement is intended to or shall prevent, impede or interfere with complainant’s non-waivable right, without prior notice to Respondent, to provide information to the government, participate in investigations, file a complaint, testify in proceedings regarding Respondent’s past or future conduct, or engage in any future activities protected under the whistleblower statutes administered by OSHA, or to receive and fully retain a monetary award from a government-administered whistleblower award program for providing information directly to a government agency.

Another suggestion? Don’t go this alone. Work with your labor and employment counsel to ensure that your agreements are up to date with the ever changing legal landscape. If you haven’t recently updated your “standard” release, now is a good time to do so. The government is watching.

Jon Hyman is a partner at Meyers, Roman, Friedberg & Lewis in Cleveland. To comment, email editors@workforce.com. Follow Hyman’s blog at Workforce.com/PracticalEmployer.

September 15, 2016June 29, 2023

NLRB Is Now Basically Creating Unfair Labor Practices Out of Thin Air

Those that have been readers for awhile know of my dislike of the NLRB’s expansion of its doctrine of protected concerted activity (e.g., here and here).

The latest on the NLRB’s hit list: employee mis-classifications. The NLRB has concluded that an employer has committed an unfair labor practice and violated an employee’s section 7 rights by (mis)classifying its employees as independent contractors. Or so was the board’s conclusion in its recently published General Counsel Advice Memorandum [pdf].

The case involved drivers for a drayage company, whom the company classified as independent contractors. The company opposed a union’s efforts to organize the drivers on the ground that they were not employees covered by the National Labor Relations Act. Even after the NLRB determined that the purported contractors were employees subject to organizing, the employer still refused to re-classify them as employees.

In response, the NLRB Office of General Counsel concluded “that the Region should issue a Section 8(a)(1) complaint alleging that the Employer’s misclassification of its employees as independent contractors interfered with and restrained employees in the exercise of their Section 7 rights.” On the one hand, the GC’s decision makes some sense. If the NLRB determines that you have intentionally mis-classified employees with the specific intent of avoiding a union, then you have likely interfered with the rights of those employees to organize.

Yet, the GC’s decision goes well beyond the facts of the case, and concludes that even a “preemptive strike” in advance of any organizing campaign violates employees’ section 7 rights.

The Employer’s misclassification suppresses future Section 7 activity by imparting to its employees that they do not possess Section 7 rights in the first place. The Employer’s misclassification works as a preemptive strike, to chill its employees from exercising their rights under the Act during a period of critical importance to its employees—the Union’s organizing campaign.

Employers, thanks to the NLRB, your risk of employee mis-classifications (which is already sky high) just increased. Get ready to start fighting a two-front war against your independent contractors. Savvy plaintiffs’ lawyers simultaneously will file the FLSA lawsuit in federal court and, based on this Advice Memorandum, the unfair labor practice charge with the NLRB. Since an NLRB charge typically moves faster than a federal wage/hour lawsuit, expect the (unfavorable) Board decision first, and expect your contractors to argue the conclusive and binding effect of that decision in the FLSA lawsuit.

The NLRB is wading into uncharted and dangerous waters — creating an unfair labor practice out an alleged wage/hour violation. Moving forward, expect the employee friendly NLRB, and not federal judges, to decide whether you have classified your workers properly. This development is decidedly not to your benefit.

Jon Hyman is a partner at Meyers, Roman, Friedberg & Lewis in Cleveland. Comment below or email editors@workforce.com. Follow Hyman’s blog at Workforce.com/PracticalEmployer.

August 31, 2016June 29, 2023

Did the NLRB Do More Harm Than Good By Permitting Teaching and Research Assistants to Organize?

Last week, in Trustees of Columbia University [pdf], the National Labor Relations Board upended decades of precedent by holding that federal labor law covers graduate and undergraduate teaching assistants, and graduate research assistants.

This case has received widespread national coverage (such as here and here). It is academically and politically interesting, and worth your time to read even if your business doesn’t involve academia. Moreover, the board’s willingness to so easily depart from such well established precedent should be troubling to all employers.

The aspect of the decision I want to focus on in Member Miscimarra’s dissent, specifically his argument that because of the NLRB’s recent super-expansion of the doctrine of protected concerted activity, this decision will harm the very students it intends to protect.

Non-Confidential Investigations. If your son or daughter is sexually harassed by a student assistant and an investigation by the university ensues, the university will violate federal law (the NLRA) if it routinely asks other student-assistant witnesses to keep confidential what is discussed during the university’s investigation.
Witness Statement Disclosure. In the above example, witness statements submitted by your son or daughter about sexual harassment by a student assistant must be disclosed to the union, unless (i) the university can prove that the statement’s submission was conditioned on confidentiality, and (ii) even then, the statement must be disclosed unless the university can prove that your son or daughter needs protection, or other circumstances outweigh the union’s need for the witness statement.
Invalidating Rules Promoting Civility. The university will be found to have violated the NLRA if it requires student assistants to maintain “harmonious interactions and relationships” with other students.
Invalidating Rules Barring Profanity and Abuse. The university cannot adopt a policy against “loud, abusive or foul language” or “false, vicious, profane or malicious statements” by student assistants.
Outrageous Conduct by Student Assistants. The university must permit student assistants to have angry confrontations with university officials in grievance discussions, and the student assistant cannot be lawfully disciplined or removed from his or her position even if he or she repeatedly screams, “I can say anything I want,” “I can swear if I want,” and “I can do anything I want, and you can’t stop me.”
Outrageous Social Media Postings by Student Assistants. If a student assistant objects to actions by a professor-supervisor named “Bob,” the university must permit the student to post a message on Facebook stating: “Bob is such a nasty mother fucker, don’t know how to talk to people. Fuck his mother and his entire fucking family.”
Disrespect and Profanity Directed to Faculty Supervisors. The university may not take action against a student assistant who screams at a professor-supervisor and calls him a “fucking crook,” a “fucking mother fucking” and an “asshole” when the student assistant is complaining about the treatment of student assistants.

The dissent concludes:

It is also a mistake to assume that today’s decision relates only to the creation of collective-bargaining rights. Our statute involves wide-ranging requirements and obligations.… Therefore, parents take heed: if you send your teenage sons or daughters to college, the Board majority’s decision today will affect their “college experience”….

The above examples constitute a small sampling of the unfortunate consequences that will predictably follow from the majority’s decision to apply our statute to student assistants at colleges and universities. The primary purpose of a university is to educate students, and the Board should not disregard that purpose in finding that student assistants are employees and therefore subject to all provisions of the NLRA.

I could not agree more.

Jon Hyman is a partner at Meyers, Roman, Friedberg & Lewis in Cleveland. Comment below or email editors@workforce.com. Follow Hyman’s blog at Workforce.com/PracticalEmployer.

May 1, 1996March 15, 2019

Why At-will Employment Is Dying

Employers these days can’t terminate an employee without feeling a little nervous—and for good reason. Wrongful termination suits abound. Anymore, we need a stack of documentation and a series of disciplinary actions before we can even consider firing an employee. We need to check and recheck our tracks to ensure everything has been covered. The whole process can take up to a year, forcing us to focus our time and energy on our poor employees instead of our promising ones.

Yet most states have some sort of at-will history, allowing the termination of employees at any time, for any reason. Why then all the fuss over justifying a termination? To be blunt, it’s because at-will employment is on its last leg. Ironically, it’s the very laws designed to give employees an even break that have left employers at a disadvantage. Christopher Bouvier, senior labor counsel for San Francisco-based ABM Industries, details at-will employment’s erosion and offers advice on terminating employees safely.

To start out, can you give a definition of at-will employment?
Employment at will is supposed to mean that either the employer or the employee can terminate the employment relationship at any time, for any reason. That was the traditional American definition.

What’s at-will employment’s history?
The American concept of at-will employment dates back to the mid-19th century, rising primarily out of English common law. In the old days, the view was that an employer had the absolute right to choose its employees. And employer attitudes around the turn of the century were that you can terminate an employee for any reason you want. That was the way it was. It was accepted without question at that time and well into the 20th century. So that’s [the notion] it comes from: The right of capital to discharge labor was absolute.

In the United States, how was it handled—was it covered by legislation?
It depends on the state. California, for instance, has a labor code. It has been codified at least since the 1870s that an employer has the right to terminate an employee at any time, for any reason, and likewise, an employee may leave at any time. Other states have similar statutes. It may not be written in law and not passed by the legislature, but it has been decided by case law—the decisions of the courts have recognized that right. I’d say most states recognize at-will employment.

How did the spirit of at-will employment begin to erode?
In my opinion, the first major assault on employment at will was the development of labor laws in the early 20th century—the 1930s—which culminated in the current National Labor Relations Act. That act was attempting to strike a balance between the rights of labor and capital. One of the things Congress did was to protect an employee’s right to organize or be part of a union. It became unlawful at that point for an employer to terminate an employee because he or she had pro-union sentiments or union support. I believe that’s where you saw the first limitations on an employer’s right to discharge at will.

Did this sentiment snowball?
Federal labor laws basically cultivated labor unionism to an extent and allowed it to grow. Labor unions then were able to negotiate contracts that included protections for the right of discharge too. In other words, employers and unions would negotiate collective-bargaining agreements, and it became fundamental practice over the years that those agreements actually would have a clause in them that prevented discharge without good cause. The opposite of employment at will is no right to discharge unless good cause is proven by the employer. These protections began to appear in collective-bargaining agreements.

And this loss of at will expanded throughout unionized companies?
Yes, it did. Having the strength to bargain with employers, unions were able to negotiate these contractual limitations that said you can’t fire any union member unless you have good cause—and, of course, whether you had good cause would be decided by an arbitrator. This was in the 1940s and 1950s, and at that time it only applied to union employees. There was a 40-year period in which unionized America was winning more and more job protection. The concept of at-will employment was almost completely absent from unionized America by the 1960s. You couldn’t fire a union member unless you could prove that he or she deserved to be fired.

What was happening within the nonunion workforce?
In nonunion America, the concept of at-will employment was going strong. You could be fired at any time for any reason. There was a rather large segment of the workforce that was non-union, and those employees virtually had no protection against discharge. So there was a dichotomy. But with all these lawsuits now, we’re seeing the demise of at-will employment in the nonunion setting. The concept germinated in nonunion America by the fact that [eradicating at-will employment] was not unheard of anymore. It had been present in the labor community for a long time.

So it was simply a case of the non-union workforce following the example set in union America?
Not entirely. I’d say, personally, that Title VII of the Civil Rights Act was the beginning of the end for at-will employment in nonunion America—that was in 1964. It didn’t specifically eliminate at-will employment. But what it did was say it’s unlawful for an employer to terminate employees or to affect negatively the terms of employment because of an employee’s race, sex, national origin or religious beliefs. Before Title VII became law, if an employer didn’t like the fact an employee was, for example, Jewish, it could terminate that employee and really not face any problems. Then all of a sudden, you had an entire federal law that made it [illegal] to fire an employee because of one of his or her immutable characteristics, such as skin color or heritage.

This obviously was a much-needed law with excellent intentions—how did it become a stepping stone for the elimination of at-will employment?
Although Title VII said nothing about at-will employment, it suddenly provided a certain level of protection for an entire class of workers. Previously an at-will employee could be fired for any reason or no reason at all. Title VII allowed you to terminate an employee for any reason that wasn’t unlawful. So basically it became wise for employers to start having policies and documenting actions to protect themselves from any claim under Title VII. In 1967, Congress amended it to protect people older than 40: the Age Discrimination in Employment Act (ADEA). So that was another federal law that was in effect limiting the employer’s right to discharge an employee at will—union or no union. Then in the 1970s, states individually started passing their own fair employment laws that mirrored Title VII. The majority of states now have laws against discrimination in discharge.

Would you say the mindset toward employment was changing during this period?
The long-standing job protections for union employees combined with the protections of Title VII began to impact the thinking of employees, juries and judges. A mindset over time developed that employees couldn’t be fired without a good reason and without a lawful reason. So that’s the statutory erosion. At-will employment has eroded to the point of almost being extinct.

You say statutory erosion—was at-will employment under attack in other areas also?
Starting in the 1960s and 1970s, there were other concepts that came up that further limited an employer’s right to discharge at will. One of the first ones was a public-policy exception to employment at will. That’s where an employer’s right of discharge is limited by concerns of public policy. The classic example: An employee refuses to commit a crime at the employer’s instruction. The employer says, “Oh yeah? Well you’re fired.” That’s a public-policy violation. The courts over time have said you can’t have an employer having the right to fire an employee for reasons like that because it affects public policy.

You’ve mentioned damage awards and juries. Where do they fit in with the erosion of at-will employment?
Many legal theories allow terminated employees to seek a jury trial, and permit recovery of more than lost wages and reinstatement. A plaintiff in an employment case can often recover compensatory damages for his or her emotional harm, punitive damages in outrageous cases, and his or her attorney fees, which often exceed $100,000. After 60 years of increased employment rights, jury members tend to expect that an employee can’t be terminated without good reason, and they’ll award large damages if their sense of fairness is offended. The possibility of jury verdicts with large monetary awards makes employment cases attractive to plaintiff attorneys.

In the 1980s, wasn’t there an explosion in the area of employee contract rights?
The courts acknowledged an implied covenant of good faith and fair dealing between employers and labor, which was very popular among all of the states between 1980 and 1988. It said that an employer couldn’t discharge an employee in “bad faith.” In bad faith would mean to terminate the employee for arbitrary or unfair reasons without any real basis in fact or law. Many employees succeeded in obtaining large damage awards, which made these cases very desirable to plaintiffs’ attorneys. This particular claim is less widely used now because several courts eliminated the availability of punitive and compensatory damages.

What other developments were happening during this time period?
Another development that was going along side by side with the good faith and fair dealing covenant was the right of employees to prove the existence of implied contractual terms that limited the right of the employer to discharge at will.

How would they do that?
Let’s say I worked for a company for 20 years and during that time I’d been promoted from a stock boy in the mail room all the way up to the head of a division. I’d been given awards and raises, commendations and promises from my employer about my future with the company. Over time there’s going to be enough evidence accumulated for me to show that even though there’s not anything written down on paper, I have a contract, and they can’t terminate me unless they have good cause for doing so.

That’s another exception to the at-will doctrine?
Yes, it is. They can say that over this period of time, because of all the things that my employer has said to me and because of all the things said about my future, I had a reasonable expectation that I couldn’t be fired without good reason. So even though there are state laws that say you can fire any employee for any reason, employees can overcome that law. You can look anywhere you can possibly think of for statements by the employer: awards, commendations, longevity of employment, raises, verbal promises by your boss, or the most popular—employee handbooks.

Handbooks are a big trouble spot?
They were a fertile area of litigation in the 1980s, and they still are. In implied-contract litigation, the lawyers for the plaintiffs would subpoena employee handbook materials and cull through them to find whatever evidence they could to show an implied contract. At trial, they’d take the first page of the employee handbook where [a firm] talks about how it looks forward to a long, profitable relationship and wishes the employee a future with the company. The lawyers would blow this up 10 times and stick it in front of the jury. All those laws—Title VII, ADEA and other labor laws—have an impact on everyone’s mindset, on the jury as well as the judiciary, who are deciding these appellate cases. At this point they’ve had 40 years with the concept of employment rights, and it’s reasonable to both juries and judges that employees should have some kind of protection and shouldn’t be treated arbitrarily. All of a sudden, a lot more of the legal theories became a lot easier to swallow, when 50 years earlier they were completely foreign concepts.

Where will all this go?
The trend continues. We have the Family and Medical Leave Act, the Americans with Disabilities Act, the continued development of torts in contract claims and the public-policy claim. There’s still a tiny element of at-will employment still alive, but for the most part employers, just to be safe, have been forced to develop policies that are fair and equal and consistently applied; they have to document employees’ histories. From a lawyer’s point of view you still could argue that at-will employment exists under very limited circumstances. But, just to protect themselves, employers are required to be careful in how they treat employees. The result is that it’s really difficult to terminate any employee unless you can show you had a legitimate reason to terminate him or her. I wouldn’t want to declare at-will employment completely dead, but it’s lying on the ground gasping for breath.

Any suggestions for employers?
The safest thing for employers to do is to have uniform employment policies that also are uniformly applied and well publicized to employees. It is extremely important to maintain good documentation about specific treatment of specific employees, so that when the inevitable challenge to your termination decision comes, you’re able to show the employee was treated fairly, that he or she knew about the rules, and that he or she received due process and fair warning about what the consequences would be for failure to follow the rules. You need to show you gave employees a fair opportunity to perform well before you finally terminated them. Documentation has, of course, become critical because otherwise you won’t have anything to show when your judgment is questioned.

Is it getting hard to run a business these days?
Yes, it certainly is. Because of the constant enactment of laws and continual judicial activism, it requires a high level of sophistication for a businessperson just to maintain and manage employment relationships. And without that level of sophistication, you have huge areas of liability that really can hurt a fledgling business. It’s difficult to keep up with all the developments that come around.

Personnel Journal, May 1996, Vol. 75, No. 5, pp. 123-128.